Merrill Lynch To Bring Hedge Fund Investing To UK High Street

by Phillip Morton, Investors Offshore.com

03 May 2005

Investment bank Merrill Lynch is on the verge of winning approval for a new hedge fund product that could be marketed on the UK's high streets for an initial lump sum of just £10,000.

According to The Times newspaper, the UK Absolute Alpha Fund, described as a "hedge fund in a unit trust," is expected to be approved by regulator the Financial Services Authority within the next few days.

Although not a hedge fund in the true sense of the word, the new fund will be able to sell short stocks and invest in derivatives such as stock futures. However, it will not be permitted to borrow.

The new product will be offered to middle-income investors for a minimum investment of £10,000 or £250 per month, and will be distributed through Nationwide Building Society branches and internet-based fund supermarkets.

Traditionally, hedge funds have been the preserve of wealthy, sophisticated investors with the means to invest at least £100,000.

Until recently, regulators have been reluctant to allow hedge funds to permeate down to investors of more modest means. However, the FSA is due to publish a discussion document next month which would explore how hedge funds could be more widely marketed whilst also protecting consumers against possible mis-selling.

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